UBS shuts out van Eyk Research
One of the country’s largest fund managers has cut-off access to van Eyk Research, accusing the ratings house of acting as its competitor and claiming that it could not trust the group to keep its investment processes confidential.
UBS Global Asset Management wrote to van Eyk last week saying that it would no longer allow the researcher’s analysts to rate the group because they posed a competitive threat to its business.
The Swiss-based manager claimed van Eyk had changed its focus from research to funds management, and that UBS’s investment processes and proprietary systems were at risk.
Van Eyk has the largest share of the investment research market for financial planners in Australia. Since 2003, it has also offered the Blueprint Series, a range of fund-of-fund investment products.
The allegations left van Eyk managing director Stephen van Eyk stunned last week. He said UBS had not contacted the research house with its concerns before making its decisions.
Other researchers and consultants, including Mercer, Assirt and Frank Russell, also offered investment products, van Eyk said.
“I would hope if people had concerns that they would ring me and say that they had concerns,” he said.
“I don’t think they have much to worry about and I’m sure I would personally be able to convince them of that. All I’m saying is that it is a pity it has got this far before I’ve had a chance to convince them.”
UBS chief executive Colin Woods told Money Management the group had been considering the move for some time.
But van Eyk’s decision late last year to launch a hedge fund-of-fund option in its Blueprint Series may have been the final trigger.
UBS is one of the world’s largest hedge fund-of-fund managers.
“It is pretty clear that they have a focus as a fund manager now offering a variety of different products. As a result, I see them as being a competitor,” he said.
“To me it doesn’t make a whole lot of sense to provide them with access to our people, investment processes and proprietary systems and not feel assured that its use will be confidential.
“I just don’t think it makes good commercial sense to open ourselves up to a competitor.”
Woods denied the accusations against van Eyk were a reaction to a poor rating of the group.
UBS’s Australian, international and fixed interest capabilities currently have an average ‘B’ rating from van Eyk, while the group’s property securities funds have an ‘A’ rating.
Woods said he had already met with the manager’s largest financial planning dealer group clients to explain the move. At least one of the groups use van Eyk research exclusively to assess managers for its advisers.
Woods said he did not expect advisers to drop UBS because of the move, but conceded there would be an impact on the business.
“Could we lose money out of this? Of course we could but we think it is manageable,” he said.
“….it could be $100 million, but it could be more.”
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